A redacted image of the letter Microsoft sent out. (Source: TechCrunch)

Accounting error sees HR scrambling to get some of its money back

What’s something worse than being pink slipped? If you’re a former Microsoft employee, it could be having some of your severance pay taken back.

According to TechCrunch, someone at Microsoft made an accounting error when calculating laid-off employees’ severance pay, resulting in some checks being mailed out that were a little too generous. Now, Microsoft wants that money back.

“An inadvertent administrative error occurred that resulted in an overpayment in severance pay by Microsoft,” reads a letter the company mailed out. “We ask that you repay the overpayment and sincerely apologize for any inconvenience to you.”

TechCrunch reports a Microsoft spokesperson confirmed the letters but refused to give specific details, calling it an internal, private matter between the company and the employees it let go.

The spokesperson did confirm, however, that the error worked both ways: while some employees were overcompensated, others received less than what they were entitled to.

A photograph of one of these letters, provided anonymously, shows little more than a request for the money back and some important tax information, with some rather curious advice on how repayment “in a later calendar year” would affect the receiver’s taxes.

CNET suggests the letter contained a “veiled threat” of monetary punishment, but given the aforementioned tax suggestion it is hard to see how the letter, in and of itself, sports teeth. There is no mentioned deadline.

On a rather humorous side note, a poll accompanying the TechCrunch article suggests that almost 75% of the 8,000 total voters would ignore the letter and keep the cash – and only 13% would immediately give the money back.

UPDATE 23-Feb-2009: Microsoft reversed its stance and is now letting the overpaid employees keep the extra money.

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The link says, basically, that there are two and only two things an employer can withhold from an employee's check. Overpayments aren't one of them, thus they aren't mentioned.

The opinion letter posted at http://www.dir.ca.gov/dlse/opinions/1999-09-22-1.p... also states very clearly that "wage garnishment law provides the exclusive judicial procedure by which a judgement creditor, including an employer, can execute against the wages of a judgement debtor" and that "if an employer deducts any portion of an employee's paycheck because the employer previously overpaid the employee, DLSE would view the deduction as unlawful." The case the letter references on page two is without a doubt a "clerical, administrative or accounting error."

I've worked with HR and Payroll for several years, and I've seen this in practice many times. I assure you that if you overpay an employee in California, your only recourse is the courts, who will judge in favor of the employee anyways.

quote: The link says, basically, that there are two and only two things an employer can withhold from an employee's check.

Just to clarify this point, only voluntary deductions and taxes can be withheld. Anything else requires a court order. In California, for better or worse, employers are treated the same as anyone else who would seek to garnish an employee's wages.

As you stated, in California, a company is forbid from collecting overpayments by garnishing wages from future checks.

However, as you stated, a companies only recourse is to file a civil suit to collect overpayments.

How is this any different for this situation than any other state? If I was a Washington resident and refused to pay back the overpayment, MS's only recourse would have to be through the courts.

Your original statement about Cali's law took the position that it would be impossible to collect overpayments. This is clearly wrong. Perhaps your wording was unintentional, but a company has a legal means to recover accidental overpayments to California residents.

In Washington, or any other state aside from California, you wouldn't necessarily have the option of refusing. The employer can recoup the wages without your permission by withholding it from future checks or even by directly withdrawing it from your bank account if you have direct deposit.

In California, MS would need your written permission to take the money back. If you refused, they would have to get a court order to take the money back and are forbidden from retaliating you in any way (i.e. termination or a bad reference.)

Furthermore, application of California law is so heavily biased in favor of the employee that unless the overpayment was shown to be in some way the employee's own fault, any California court of law is going to reject the employer's case.

So, yes. I would say that without written permission it is impossible in practice to legally collect an overpayment of wages in California.